R.I.P. Uncle Gary

My uncle died last week. Thanks, Dad, for this perspective:

"My enduring memory of Gary is his extraordinary devotion to Bernie. Her comfort and welfare always came first for him. When he called her "Babe," he made it sound like he was the luckiest guy in the world to have found his soulmate. They deserved more happiness than they got, but they had a super-size portion of Love. I will miss him and his example of keeping-his-cool when everybody around him had lost theirs."

Well said.

R.I.P. Uncle Gary!

"I AM IRONMAN!!" (Not ME...my friend Jim)

If you didn't see his face plastered on the back of every Metro bus last year, or maybe you're just living under a rock...let me take a minute to introduce you to my friend Jim Galvanek. Jim is an 11-year cancer survivor who is more than doing his part to help wipe out blood cancer by raising money for the Leukomia & Lymphoma Society.

I met Jim through our common interest in real estate, and have admired both his tremendous dedication to achieving his goals, and his passion for giving back to those who were instrumental in his recovery. Jim was formally recognized in 2008 as the National Capital Region's Leukemia & Lymphoma Society's "Man of The Year" for raising over $160K during his first Ironman Triathlon in Lake Placid. Jim's leaving today for Wisconsin to compete in his second Ironman, and again raising money for the LLS.

Watch Jim's video and you can post your comments of support for him here.



If you want to contribute, click on the yellow "DONATE" button at http://www.dayzerotoironman.org/

P.S. In case you were wondering, "yes" I must confess...I am guilty of supplying Jim with the "game-changing" supplements that have helped him pack on 10 pounds of lean muscle mass in preparation for this competition. I know, it's really not fair to the other athletes...but it's for a terrific cause!

Going Once...Going Twice...SOLD!!

Who would have thought you could buy a 3 bedroom, 2.5 bath single family house, with a finished basement, hardwood floors, huge fenced backyard, and secure parking for under $265K?!

I ran my first Home Auction last weekend and it was a smashing success! Of course I was a little nervous that it wouldn't sell for as high a price as I really needed in order to make a fair profit...but it all worked out just fine. The contract has been signed by all parties and the earnest money has been deposited in escrow. All that's left now is to wait for closing at the end of the month.

After we close (don't want to jinx anything!) I'll post a video on how this deal went down. It'll be one of those deals where I have to preface by saying "do not try this at home..." because I broke a couple of my own "rules" to adapt to all the adversity I encountered. Every investor needs to decide for themself just how much risk they are comfortable taking. Me, I like to swing for the fences. Sometimes, that means I strike out...but this one looks like a winner.

All that's left now is to sell the piano that came with the house. Maybe I should run another auction?! $450 or best offer. Who's interested...?

OK, I Confess...I Miss Flying!

After graduating from the military academy in 1994, I spent the next year and a half learning to fly helicopters at lovely Fort Rucker in L.A. (Lower Alabama). I went on to fly for a total of 8 ½ years on active duty in the Army and I guess I’ve been “out” for about 7 years now. For the first 4 years I was fine, learning how to be a “civilian” and adjusting to a new corporate environment. Then about 3 years ago I really started to miss flying, so I did what any sensible 33 year old bachelor living in downtown Washington, DC would do – I bought a Harley. Always wanted one since I was a kid growing up in Wisconsin seeing them thunder down the interstate in the summertime in packs of what seemed liked hundreds of “hogs” at a time.

3 years later, my bike doesn’t get nearly as much attention as either of us would prefer, but I’ve made an effort lately to get it out even if just for short trips around town. This first picture is of my bike in front of a house I’m currently trying to sell. See, I had to make this “flying story” tie in to real estate somehow ;-)

Today, I find myself in Virginia Beach. Just checked into the hotel, opened the sliding glass doors to my balcony to see about 100 seagulls just dancing in the wind right in front of my 11th story window. I could have reached out and touched a couple of them they were so close. This picture doesn’t do the scene justice, but you should hear how loudly the waves are breaking right now! Reminds me of 4 of the best years of my life I spent living on the beach while stationed in Hawaii. I think I’ll probably have to take a dip after dinner…

You know, it probably didn’t help to see all the jets buzzing low over the highway while driving in this afternoon either. So yeah, I definitely miss flying. Need to sell a few more houses though so I can afford to buy a plane I guess. But then when would I ever ride the Harley? I know, life is pretty good when these are the problems I’m dealing with. The smell of this salty air is a great reminder of just how lucky I am!

Virtual Tour - 8509 Flower Ave, Takoma Park, MD 20912

We had a buyer lined up but they couldn't get financing, so this one is still available. You need to watch this NEW video to see what we've done to the place.

We're only asking $267,950 (I know...we must be crazy!)
Zillow.com says it's worth $438,000
Yes, it's a fixer-upper and needs some work, but there's over $100K of instant equity!

The Upstairs Unit is 2 Bedrooms, 1 Bath, plus Loft/Attic. Downstairs Unit is 1 Bedroom, 1 Bath, plus Den/Extra Bedroom. Behind the house is a 2-car Garage, patio, and shaded backyard. Watch this video for more details:



Call Jennifer at 800-871-1999 for more information.

Are You a WINNER? This Home Will Be Sold To The Highest Bidder in 24 Hours...!!

Our "Sneak Preview" Open House today went terrific! Check out the video and if you are in the market for a 3 Bedroom, 2.5 Bath Home in Montgomery County, you would be a special kind of stupid not to stop by and put your bid in on this baby. I have a feeling someone is going to STEAL this House tomorrow. Could it be YOU?! Call 800-871-1999 to hear all the details on how the Round Robin Auction works. Remember...Buying a House Is More Fun When YOU WIN!! And call me if you need directions or get lost...I'll guide you in like ATC (I did used to fly helicopters, you know!) Hannibal Rock Bray rockbray@gmail.com 800-871-1999, x411 - goes to my direct line

THE RULES...Round-Robin Auction this Weekend - $189,500 or Best Offer

So a lot of people are calling and asking "What's the Deal?" with the Auction this weekend, so I figured I should probably write it all out for everyone.

1) Yes, we are auctioning off our house this weekend at 6906 New Hampshire Avenue in Takoma Park, MD 20912.

2) We are hosting an OPEN HOUSE for you to come Inspect the home this weekend all-day Saturday and Sunday, August 29th & 30th, from 10am - 5pm on both days.

3) After Inspecting the Home, you will be allowed to bid on it.

4) The Bidding Sheets will be left in plain view for everyone to see.

5) Starting at 8pm Sunday night, I will call every buyer, starting with the high bidder and working doward. (So please, when you leave your bid, please make sure you leave a number where I can reach you Sunday night after 8pm. You can make your bid or change it over the telephone up until 8pm Sunday night.)

6) I will call all interested bidders until there is one high bid and no other bidder wishes to top it. All bids must be at least $500 apart. If there is more than one bid at the same level, the earlier bid will be honored.

7) When I call you, I will say, "Currently the high bid is $(whatever it is)...Do you want to advance the bid?"

And it's really that simple. If you are the Winning Bidder we'll get together to sign a contract and my attorney will prepare all the necessary documents required for our settlement. If you have any questions about the entire process I assure you they will all get answered when you come to inspec the home this weekend.

I look forward to seeing you this weekend and remember -- Buying a House Is More Fun When YOU WIN IT!

Warmest regards,

Hannibal Bray

P.S. If you need help with directions to the house, just call 800-871-1999, x411 to connect to my direct line and I'll guide you in. See you soon!

P.P.S. If you already saw the video tour of this property online...you won't recognize it this weekend. We've done a lot of work to get it ready for you to move in. Check back on Thursday for the updated pictures and video tour.

Another Killer Deal in Takoma Park!

Understanding Your Credit: by "Jungle" Jim Galvanek

What is in a Credit or FICA Score?

Credit card companies can be evil, so YOU need to learn to play their game. Even let them win a little bit, but let them win at 3.99% or 7.99% and not 24.99%. Once you understand how they play the game you can take advantage of their system. You will need to learn to read your statements and follow the interest rates. I use an excel spread sheet. You will need to stay proactive by calling them every 6 months or more to ask to lower your interest rates or increase your limit. Below is a brief outline of what is in a FICA or credit score and “How to Play the Game”.

There are 3 Credit Repositories:
1. Equifax (www.Equifax.com)
2. Trans Union (www.transunion.com)
3. Experian (www.experian.com)

Notes: You may want to consider becoming a member of at least one if not all three. If money is an issue you can sign up though Discover card and they will monitor for 7.99 a month.

What makes up your credit score?
Credit Score Percentages
35% Payment history
30% Debt to available credit
15% Credit history
10% New credit
10% Types of credit used

35% Payment History:
1. Things coming off after 7 years is a myth
2. Always ask for a letter of deletion
3. Always ask to get a supervisor on the phone
4. They list your account number as *******5555. You can dispute that *****555 is not your account number.

30% Debt to available credit
1. Actually—Debt to available balance
00-30 Green light
31-70 Yellow light
70-100 Red light

2. Open only investor friendly cards
3. Call you credit card companies to raise your limits every 6 months. Ideally right after you paid your current bill off in full.
4. Two Great credit card sites: (Look for promotional rates and low interest cards)
www.creditorweb.com
www.creditcards.com
5. Always ask for credit card checks. These are often better than going to a bank for a loan.
6. Build both personal credit and business credit. If your personal credit is bad you need to fix that but you can also build you business credit though credit cards

15% Length of Credit History:
1. Start a good credit history as soon as you can
2. Open a bank account and secure credit card for bad credit cases and those opening first time credit cards
3. It’s never to early or late to start the credit process
4. Start your kids early (get credit cards in their name to build their FICA score)
5. Banks to avoid are Cap One and US Bank

10% New Credit (2 types):
1. Hard hits (You want to limit these to a few a year)
a. Loan inquires
b. Utility start ups (Cable, Electric gas etc.)
c. Car loan
2. Soft hits (These do not affect you score very much)
a. You puling your credit score from one of the big three agencies
b. Appling for a credit card
c. If you get the card offers in the mail then they have pulled a soft hit on your credit.

10% Types of Cards Used:
1. Store Cards (Avoid the cards unless you have had for more than 10 years or Home Depot, Lowes or Sears and you use for rehabbing or business) These will hurt your credit score.
2. Visa, Master Card, Discover, Amex are all good options


Three ways to dispute items on your credit report:
1. Call (Trans Union is the only one that will answer the phone)
2. Internet (email)
3. By sending a letter (Certified)

How do you repair your credit??
1. Dispute derogatory or incorrect information on your credit report
2. Dispute by phone, email and certified letter
3. Letter to creditor for deletion of information on your credit report
4. Letter requesting account statement
5. Letter to Federal Trade Commission in regards to the removal of the item

Good cards for investing or doing rehabs:
1. Amex Blue
2. Discover Platinum
3. MBNA
4. American Express Platinum Business
5. Skymiles card

Action Items:
1. Call all your credit card companies and ask them to lower your rate or ask for a promotional rate.
2. If you are going to use an advanced strategy to use credit cards as short time loans you will need to apply for a new card about every 3 months. This is often better than going to a bank or hard money.
3. Get rid of all you department store cards unless you have had them for more than 10 years and have a good credit history.
4. Pull your free credit report at one of the 3 agencies and dispute any derogatory items on your credit report. You will need to contact all three about the item on your report.
5. Set up business credit cards to build credit for your business. This will be especially good if you have poor credit that will take you a few months to clear up.

You must take action. In this day and age, life is not about “hunting and gathering” –It is about FICA. How things have changed and they will only get more interesting as we continue to move forward. The rules seem to change daily with the new administration, so stay abreast to the changes and be proactive!

Jim Galvanek
HLA Properties
www.hlaproperties.com

Can You Keep a Secret (Seriously!)...?

Simple question: Would You Buy a House at Costco…?

Simple answer: You would if you knew how!

What on earth am I talking about? Why, wholesaling real estate of course! Now shhhh…don’t let anyone hear you reading this because I’m about to unleash the secret way that you can build long-term wealth by investing in real estate WITHOUT HAVING TO PAY RETAIL PRICES!!

The Wholesale Purchase:

Do you shop at Costco or Sam’s Club? What about Carmax? Or Marshall’s…or T.J. Maxx?

If you don’t like to pay retail for the “little things” like food, cars, your clothes, etc., then why on earth would you pay retail for the biggest purchase most people ever make?! It makes no sense at all to the value investor. Every once in a while you may find a “deal” on the MLS (Multiple Listing Service), but smart investors who are investing for long term-term wealth know there is a better way. In fact, they often use their self-directed ROTH IRAs or 401(k)s so the profits from their investment all grow TAX FREE! Yes, you can totally do this too, and I’ll teach you how in a later chapter.

DISCLAIMER: The kind of real estate investing we’re going to talk about here does not apply to the purchase of your primary residence. If you have fallen hopelessly in love with the house of your dreams, there is no hope for you – you will undoubtedly pay too much for the property. Yes, I have done it myself…and yes, pleasing my significant other was involved, so that’s my alibi! However, if you can remove your emotions from the equation and just focus on the numbers of the deal, then buying properties Wholesale is the way to go.

Sounds good so far, right? Now you’re probably asking how this works, and the best way I know how to explain it to you is to just explain our business model and give you some examples. Please send your questions via the comments and we’ll answer them promptly.

STEP 1 - MARKETING

This will come as no surprise to the seasoned investor, but the whole process starts with marketing to homeowners. As wholesalers, we market to a very specific set of demographics within our targeted geography. This includes buyers in distress who need to sell their homes and need to sell fast. Sometimes the homes are in distress too. Either way, when we buy someone’s house, we provide a valuable service to them by paying a fair price for taking the home “as is” and letting them move out on the date of their choice.

Now, the purpose of this article is not to teach you how we negotiate our deals will sellers (that’s a whole separate chapter!), but suffice it to say that we acquire our properties at significant discounts below market value. Some of these properties we will keep as long term investments. Others, need a lot of work and occasionally we will rehab/renovate them ourselves so we can re-sell (flip) them for a higher price. However, on a lot of the properties we acquire…we just want to make some fast cash. This is where you come into the picture. We call this “flipping paper” or wholesaling the deal. Basically it works like this:

 Motivated Sellers contact us to buy their house (via Direct Response Marketing)

 We make an offer / the seller accepts / we put the house under contract and set a closing date (typically 30 days from the date we sign the contract)

 We send you an email detailing the fair market value of the subject property based on recent sale comps, our asking price for the property (this will be a fair amount higher than what we have contracted to pay for the property), the equity spread, estimated closing costs, estimated repairs, pictures, and usually video clips too…basically everything you need to decide if the property is something you want to pursue.

 We usually get enough response in the first 72 hours of “posting” each deal that if you snooze…you really do lose.

 We “assign” the deal to the first Buyer/Investor who contacts us and pays a non-refundable deposit (typically $2,000…this shows us you’re serious). The balance of the assignment fee (usually somewhere between $5,000 and $15,000…but could be upwards of $50K depending on the nature of the deal) can be paid at Closing. There are specifics on exactly how the money needs to change hands that we address once you have expressed interest in one of our deals.

 At closing, you will need to show up with the following funds. We don’t care if you pay all cash, get a traditional mortgage, or use borrowed funds from a hard-money lender. Sometimes we can even offer some financing on the property ourselves, but you will still need to produce at least some of these funds at closing.
o Cash due to seller
o Closing costs
o Remainder of assignment fee

It’s really that simple.

The Seller gets a fair price for their house, doesn’t have to do any repairs, and can move out on the date of their own choosing.

The Wholesaler (“US”) makes a fair profit for their trouble of finding a seller, finding a buyer, putting the two together and executing the transaction. Good wholesalers invest heavily in their marketing to optimize these processes. They don’t get rich off any single deal…but by executing a large volume of deals that are modestly profitable they can make quite a respectable living.
The Investor (“YOU”) acquires an asset that has inherent value (equity) built-in to property, and/or cash flow potential if your goal is to “hold” the property and landlord it yourself.

Probably the most important thing you can do to help you make the most of your real estate investing is to clearly define what kind of an investor you are, and this is really going to come from identifying your investment goals. Here’s a few questions to help you get focused on your goals.

1. How will you fund/finance your investments?

a) I Have Loads of Cash
b) I Can Borrow Loads of Cash from Family/Friends
c) I Can Borrow From Banks (Have Terrific Credit & Down Payment Saved Up)
d) I Will Borrow From Hard-Money Lenders (High Interest Rates; Loan To Value Criteria)

2. What will you do with your properties?

a) Occupy – Move into them!
b) Rehab/Flip – Fix them up and then resell them.
c) Landlord – Rent them out for cash flow.

3. What’s most important to you?

a) Cash Now
b) Cash Later
c) Minimizing Cash Needed
d) Target Profit ($ amount or % ROI…?)

4. What is your investment horizon?

a) 30-60 days
b) 6 months
c) 1 year
d) 3-5 years

5. How much work do you want to put into each property?

6. How many properties to you want to acquire this year?

Does that help? Once you know exactly what you’re looking for, your chances of finding it skyrocket! If you don’t know what you want…I GUARANTEE you won’t achieve it! So get focused on what you want, and REFUSE to ever pay RETAIL for real estate again. You can do it!

Coming in the next installment…

No-Money Down Deals using Seller Financing, Lease Options, and Rent-To-Own Programs!

Killer Deal in Takoma Park!

Ron LeGrand FINALLY Gets Jim Galvanek's Autograph!

Today’s “guest post” comes from my good friend, Jim Galvanek. Jim is a real estate investor here in Washington, DC who has been extremely successful in rehabbing single-family homes and currently manages multiple rental properties. I snapped this photo of Jim giving advice to real estate guru, Ron LeGrand, down in Florida. Or maybe I have that backwards...?!

Jim’s lesson for us today is on financing – and he tells it like it is! I apologize in advance if this article leaves you begging for more information, but eal estate financing is quite an in-depth topic. If you're lucky, I might be able to persuade Jim to write a follow-up to this article. Leave a comment if you found this helpful...or send us your questions. Enjoy!

*****************************************

Options to get cash or leverage your existing cash:

Basically, banks leverage their money by making money in the yield. For example they get their money from you in your savings paying you 1.5% and then lend it out at 4.5% to 24.5% and I have even seen higher. Credit card companies are evil when it comes to this. They take advantage of the uneducated many.

When asked what he would have done differently, Sir Richard Branson (Virgin Records, Virgin America Founder) answered, "I would have gone into more debt." Meaning he would have leveraged more money or borrowed. This would be called good debt.

Cash flow for me as a landlord is easy. I have 2 mortgages on my houses and whatever rent I collect extra I keep. Now to get here I had to leverage one house against another. But, more recently banks have been afraid to lend money to what they call risky investments. Now, I am paying 10-12% to friends and family if they invest with me on my house flips. I then take the money made and put it into rental properties that CASHFLOW.

Remember, you need to make your money on the purchase and not on the back end or relying on housing prices going up. This could be a 3 day seminar but basically after I collect rents, and pay principal/interest, taxes, and insurance, I cash flow about 1,200-1,500 (depending on expenses) a month. My plan is to get that 1,200 to 10,000 in the next 4 years. 10k or residual income will retire me. Also, by making sure the houses will cash flow, meaning the rent is more than my expenses I really don't care if the house loses value.

On another note, I also get to write off the depreciation and if I make less than 100k a year at my day job I can show a loss to the IRS. The tax laws are set up for the small business-- Get paid before you are taxed vs. an employee who is taxed before receiving their paycheck.

I also use my home equity accounts on my houses which is at 2.76 and 3.3 (interest only) which is an amazing lending price. The other game I play is with my credit cards to fund my projects. This I don't recommend to everyone because, well, like my tenants cannot handle a garbage disposal without breaking it, they will screw it up. For example my home depot card has no payment for 6-12 months with 0% interest. When I do a rehab, I am usually in and out of a deal within 6 months. I have had to roll my credit card on occasion but it's a lot easier than going to a bank that's going to charge me 8% and a point. Or hard money at 14% and 5 points.

BONUS - Mistake #8

ANSWERS: 1) A; 2) 15%; 3) C (but if you answered “A” then you share my sense of humor!)


**BONUS: Mistake Number Eight**

Homeowners Who Are “Upside Down” Don’t Understand All Of Their Options: All kidding aside, this one is pretty serious. If it pertains to you, I regret that you have found yourself in this situation. There are any number of reasons why a homeowner who needs to sell their house quickly could find themselves in a “no equity” or “negative equity” situation. Just having negative equity all by itself is not an immediate problem. Provided the homeowner can “hold on” to the house long enough for the market to rebound, they can usually count on enough appreciation over the years to build enough equity to eventually sell for a profit. However, for a homeowner who “has to sell” (for whatever reason)…having negative equity is a VERY big deal.

Why would someone “have to sell”? Unfortunately, this often results from an inability to keep paying the mortgage payments on time every month. There are many unforeseen or unfortunate circumstances that could cause homeowners to find themselves in this situation, including: Loss of Job/Income; Death in the Family; Separation/Divorce; Military Deployment; Other Overwhelming Expenses (e.g., Medical Bills, Legal Fees, Credit Cards); etc.
Regardless of the reason a homeowner cannot continue to make mortgage payments on time, the simple fact remains that the bank wants their money! They want the full amount, on time, every month, without fail.

If a homeowner “misses” a mortgage payment, does the bank call to remind them? Absolutely! And they’re usually pretty nice about it the first time it happens. They understand that sometimes people just forget to send in the check…or go to the website and pay online. No big deal, they’ll just charge you a late fee as long as you pay by the end of the month. Naturally, the bank wants you to pay on time each month.

But what if you don’t pay at all? And then you don’t pay the next month either? Now the bank starts to take a different tone with you. Banks are in business to lend money, so they really don’t want to have to go through the entire process of foreclosure proceedings (because it’s expensive for them – $40,000 on average!)…but they certainly will if they have to in order to recoup their asset. After several months of not paying the mortgage, the bank will essentially “re-possess” the house. This means they will evict the homeowner and turn around and sell the house…usually for a reduced price.

Foreclosure is an extremely serious topic and beyond the scope of this e-Book. If you are behind on your payments, I STRONGLY urge you to make every effort to get your loan current and/or work out a payment arrangement with the bank. Failing to do this, and failing to even communicate with the bank can have long-lasting and detrimental consequences on your credit and overall financial situation.

Having said all that…if homeowners find themselves in a “pre-foreclosure” situation, there MIGHT be a way for them to walk away from their house with a lessened impact on their credit and finances…and less overall stress as well. It’s called a “short sale.”

A short sale is when the bank agrees to accept less than what is owed on the mortgage. The name “short sale” is deceiving…because there is NOTHING short about the process. They should really call it a “long, complicated, low probability of success sale.” It’s a longshot. Sometimes it works, but most times it doesn’t. There are a handful of us though, who have had considerable success negotiating short sales with banks on behalf of homeowners. So yes, it’s another service that we provide, but explaining how it all works is also outside the scope of this e-Book. All I can say is that if you have found yourself “upside down” in your house, I know you have your hands full right now! If you give us a call we will be glad to review your options with you.

So after all that, are you still thinking about selling…?

If you found this book valuable, we would love to get your feedback on it. Just send us an email to: info@PointProperties.org or give us a call. If you are ready to sell, we can help you further assess your specific situation (for FREE) and help you determine the best strategy to maximize your NET CASH Equity.

BONUS SECTION - Quiz

**FREE SURPRISE BONUS SECTION**: I know, I know…this e-Book is only supposed to have “7 Mistakes” but I just couldn’t NOT tell you about this last one! This one does not particularly apply to “Most” homeowners, but it’s affecting enough people right now that I feel it is worth mentioning. But first, a short quiz to check your Real Estate Knowledge so far:

1) Your house’s value is ultimately determined by:

A) How much a qualified buyer offers to pay

B) The most recent appraisal

C) The price the neighbors sold for

2) The NET profit from the sale of your house can be as much as ___% below the GROSS Listing Price.

3) What does it mean when someone says that a homeowner is “upside down” in their house?

A) Someone has “flipped” their house

B) They paid off the mortgage and own the house “free and clear”

C) They owe more on the mortgage than the current market value

D) None of the above

Mistake #7

Mistake Number Seven

Most Homeowners Have An Inflated View Of Their House’s Market Value: How much do you think your house is worth? Is that based on: a) what you paid for it; b) what you owe on the mortgage; c) how much you’ve put into improvements; d) how much the neighbors house just sold for; d) you had an appraisal recently? All of these factors tend to influence what homeowners “think” their house is worth, but the only number that matters is what a qualified buyer would offer to pay for your house, today. The best way to predict this, is to check recent, sale comps. By “recent”, I mean within the last 90 days. And by “comps” I mean you only look at houses within close geographic proximity to your house, that are of similar size, quality, and condition.

A word about appraisals…if you recently “refinanced” your mortgage, or took out money on a HELOC, the bank probably did an appraisal. You need to know that most “refi” appraisals typically performed over the last few years were inflated so that homeowners could take out the maximum equity. So don’t be surprised when you find the market value of your house is not the same as what the appraiser told you 6 months ago.

Homeowners often have an inflated view of their house’s market value from being too narrowly focused on what’s going on just in their immediate neighborhood. How much the neighbors down the street sold their house for is important, but it’s not the only factor. If another neighbor, (maybe not on your street, but still in the same “market”) recently “got behind” on their mortgage payments and had to sell below market value…guess what? That affects YOUR market value!

I know this can be a rude awakening, but with foreclosures being at an all-time high, homebuyers currently have a lot more houses to choose from. You need to realize that these houses are your competition and if you truly want to sell your house now in the current market condition, you will need to set your asking price accordingly.

Mistake #6

Mistake Number Six

Most Homeowners Underestimate Closing Costs: We already talked a bit about Closing Costs in “Mistake #5,” but who pays Closing Costs…and is this negotiable? First, there is no getting around Closing Costs…they need to be paid by someone. Second, of course they are negotiable. During my early house buying experience (my first 2 houses) I had to pay my own closing costs because I bought in a “seller’s market” and houses were selling at a premium. More recently (my last 2 houses) the seller paid for some of my Closing Costs. Right now, sellers need to be willing to pay ALL closing costs. Again, everything is negotiable…but don’t get hung up on whether or not you will help with closing costs. Remember, the only thing that matters when you walk away is…how much NET CASH Equity you receive! If you have to pay Closing Costs…pay the Closing Costs, just figure that into your fair asking price so you can sell as fast as possible.

Mistake #5

Mistake Number Five

Most Homeowners Think They Need To “Pay Off” Their Mortgage: Do you have a mortgage on your house? If not, then Congratulations! You are truly in the minority of homeowners. Maybe you inherited a property from a relative, or you have just been extremely diligent in making extra payments to pay down your mortgage. Either way, when you decide to sell, you have even more options available to you since you own your home “free and clear.” If you fall into this category, we can help you (at no charge) decide the best strategy for maximizing the NET CASH Equity you receive from the sale of your house. Most of us, however, do have a mortgage. Usually a 1st mortgage, and maybe a 2nd mortgage as well. Or maybe it’s a HELOC (Home Equity Line of Credit). Either way, when you are deciding how much money to “ask” for your house, it’s important to make sure that you will receive enough proceeds to payoff all of the mortgage obligations. Otherwise, you will need to “bring money to the table” to closing.

When calculating your Gross Listing (or “Asking”) Price, you need to make sure you figure in the following: Realtor Commission, Taxes, Closing Costs, Listing Discount, Seller Subsidies, Repairs, etc. You can use 10-13% as a rough estimate for how much all of this will cost, but in some markets your NET profit from the sale of your home can be as much as 15% below the Listing Price.

In the following example, Tracy lives in a neighborhood where the Market Value (what average houses in the neighborhood are actually selling for) is $300K, and Tracy has lived there for 5 years. Tracy made an initial Down Payment of 20% of the original $225K purchase price, and has been making all the payments on time, so now the outstanding Mortgage is $175K. How much NET CASH Equity should Tracy expect to walk away with?

$300,000 [GROSS] Listing Price (Asking Price)
-18,000 Realtor Commission (6%)
-12,000 Closing Costs (4%)
-9,000 Listing Discount (3%)
-6,000 Limited Repairs / Professional Cleaning (2%)
$255,000 NET Sales Price
-175,000 Mortgage Payoff
$80,000 [NET] CASH Profits (Equity)

BOTTOM LINE: Assuming the house is in good condition (for the neighborhood), and is priced appropriately (based on recent sales in the neighborhood), Tracy can expect to walk away with $80K. However, it still might take 3 to 6 months to sell, during which time Tracy will still have to continue paying the Mortgage, Taxes, Utilities, Maintenance, etc. Of course, this assumes Tracy’s buyer is able to successfully obtain mortgage financing…which is not as easy as it was a couple of years ago, especially for first-time homebuyers. Over the next few pages, let’s go into depth on each of these items to gain a better understanding of the difference between Gross Listing Price and NET Cash Profits.
a) Realtor Commission. Is this negotiable? Of course it is…everything is negotiable, but you should expect to pay at least 6% for the marketing services a professional Realtor will provide. Realtors provide a valuable service – they match buyers with sellers. They typically have considerable resources at their disposal to help sell your house, and if you use their services, then your Realtor deserves to be paid for their efforts. But do you really need a Realtor to sell your house? That depends a lot on you, and how comfortable you are with the process of selling your house. After studying this free report, you will be even better equipped to navigate the house-selling process on your own terms!

b) Closing Costs. These will be discussed more in Mistake #6: “Most Homeowners Underestimate Closing Costs” but in general, 4% is a good estimate. The taxes due, and/or recordation fees will depend on your city/county/state. For example, in the Washington, DC Metropolitan area, these fees typically range from 2.2% to 3% of the Contract Sales Price. Then, you need to add an additional $1,500 – $2,000 for all the other miscellaneous closing costs that will be detailed on the HUD-1 settlement sheet you receive at closing. All together, this will probably be somewhere between 3.5% and 4%.

c) Listing Discount. In some markets, at certain times, this may not be required, but in most markets, right now, houses are selling “at a discount” not “at a premium” and this concept is very important to understand if you plan to sell or buy in the next 2 years. For instance, the first house I purchased was new construction from a builder who wanted to unload his inventory of vacant homes…so I was able to negotiate a modest discount on the purchase price. Then, the next house I bought was in a different geographical area, at the height of a “seller’s market” and I actually had to pay more than the Listing Price. This was about 5 years ago, when “escalation clauses” & “bidding wars” were common and sellers had tremendous power. Well, real estate is all cyclical, so now we’re back in a situation like when I bought my first home…there are many more houses for sale than there are qualified buyers. They key word there is “qualified” because we all know how stringent the mortgage approval and underwriting process has become as a result of the recent collapse of the “sub-prime” market. Yes, people are still buying houses, the process has just slowed down considerably. That’s why, as a Homeowner, it’s absolutely critical that you understand what is going on in your local market if you want to maximize the NET CASH Equity you receive from the sale of your house. If you want to sell fast, you should expect to offer a Listing Discount or Seller Subsidies (e.g., assistance with buyer’s closing costs) of 3% to 5% below market value.

So it’s all about figuring out how much NET CASH Equity you can expect to receive after you pay off your mortgage, right? Right, unless…

…you decide NOT to pay off your mortgage.

Huh? You may not be as familiar with this scenario, but I am here to tell you that there are plenty of buyers (many of them investors, like us) who will offer you NET CASH Equity for your house and simply “take over” your mortgage payments.

Never heard of this? It’s called purchasing a house “subject to” the seller’s existing financing, and it’s an option that more and more homeowners are taking advantage of because it solves their problem immediately. We provide this service to homeowners through our STEM program (Subject To Existing Mortgage).

When we purchase a home via our STEM program, there are significant advantages to the homeowner because they:

· Don’t have to keep paying the mortgage…we “take over” payments immediately
· Don’t have to put house on the market…no open houses, no lockbox
· Don’t have to make any repairs…we purchase the home “as is”
· Don’t have to wait for a bank to approve the loan…we pay CASH!
· Don’t have any prepayment penalties…we “take over” the mortgage, not pay it off
· Don’t have to pay any closing costs…we incur all of these expenses
· Receive NET CASH Equity in as little as 10 days!

So it’s still all about figuring out how much NET CASH Equity you can expect to receive…but your mortgage might not need to get paid off right away. Essentially, with our STEM program, the mortgage loan stays in your name, but you no longer have an obligation to make the payments.

If you’re interested in learning more about our STEM program and to see if it might be a good option for you, call us today to request your free consultation.

Mistake #4

Mistake Number Four

Most Homeowners Do “Too Much” Or Don’t Do Enough Remodeling: Should you remodel/upgrade the kitchen and bathrooms or just reduce your price? Ask yourself, do you share the same taste for design and decorating as your neighbor? What are the chances that a prospective buyer will share your tastes and style? How much time and money are you willing to spend to make repairs in “hopes” that it will yield a higher selling price? Will you do the work yourself, or hire contractors. Generally speaking, investing in your Kitchen and Bathrooms will yield a higher re-sale price, but it is possible to “overdo it” when it comes to remodeling. And depending on the specifics of your market, it may be wiser to sell your house “as is” in exchange for a reduced Listing Price. On the other hand, most buyers DO expect that the house they are purchasing will be in “move-in” condition at Closing. This doesn’t have to mean a complete renovation though. A professional paint job, new carpets, and moderate landscaping efforts can go a long way to increase your “curb appeal” to prospective buyers. If you stay conservative, and do not “blow your budget” on a huge remodeling project, then you can pass those savings on to a Buyer. If you do decide to hire contractors, be sure to do your due diligence before hiring them.

Mistake #3

Mistake Number Three

Most Homeowners Think It’s Better To Hold Out For A Higher Offer: Is your house already on the market? Has it been more than 90 days? What is your cost associated with waiting for a higher offer? What is the likelihood that you will eventually receive a higher offer? Have you researched whether homes in your neighborhood are selling at a “premium” or at a “discount?” Some neighborhoods are indeed insulated from the market’s recent impact and still enjoy modest appreciation, but most are depreciating. Regardless, it’s anyone’s guess as to when this trend might reverse. Homeowners need to personally decide how long they are willing to wait to sell and factor this into their asking price. In other words, if you decide to list your house higher than the fair market value in your neighborhood, you should expect it to take several months longer to sell. That means you will be obligated to continue paying the mortgage until you sell. On the other hand, if you were to ask several thousand dollars less in the form of a “discount” or “subsidy” you can see how that could make your house more attractive to a potential buyer.

Mistake #2

Mistake Number Two

Most Homeowners Let Someone Else Decide WHEN They Sell: Are you ready to sell now, or are you still just thinking about selling? If you need to move, and can accept some investment risk, have you investigated the possibility of renting? Either way, the timeline should be set by your needs, period. If you really need to sell now – you can find a buyer now...it’s just a matter of how much of your NET CASH Equity you are determined to preserve. Pricing your house to sell is a calculated exercise that should be based on your needs, not just to increase someone’s commission.

Mistake #1

Mistake Number One

Most Homeowners Don’t Know Their Equity: Do you know how much equity you have in your house? Don’t worry if your answer is “no” because it’s a number that changes every day based on how much you owe on your mortgage and what your home is worth. In “Mistake 5” I will take you through a detailed example so you can calculate this number for yourself. When you are selling your house, the only thing that should matter is:

How much NET CASH Equity will you walk away with?

That’s it. You can stop reading now, if that makes sense to you. Everything else that follows is just more information for you to better calculate what that number truly is.

Preface - just a bit of an introduction

All too often, homeowners stumble into the sale of their house out of necessity, or sometimes even on a whim, but rarely with a deliberate plan that has taken all of their particular market factors into full consideration. Clearly, you realize the complexity of the house-selling process and ordering this e-Book was a smart first step. If you apply what you learn in these few pages, you will have the knowledge to sell your house in “As Is” condition for a fair price on the date of your choice.

Selling your house on your terms starts with analyzing your specific situation. This report will help you start to determine your options. Then, when you are ready to sell, we can help you confidently begin the process. In some circumstances, we may even offer to buy your home ourselves as an investment. Our group of investors typically buys 3-4 houses each month. We will buy ANY house in ANY location, however, we primarily serve Washington DC and the surrounding areas including Northern Virginia, Maryland, Montgomery County, Chevy Chase, Bethesda, Takoma Park, Silver Spring, Columbia Heights, Dupont, Adams Morgan, Petworth, Shaw, Logan, Georgetown, Foggy Bottom, Rockville, and Gaithersburg.

For most people, their house is their number one asset. So I want to congratulate you on your decision to learn more about how you can maximize your NET CASH Equity whenever you ultimately decide to sell your house.

Now turn the page and let’s get into the “7 Mistakes” so you can learn how to avoid them!

The 7 Most Costly Mistakes...When Selling Your House

My name is Hannibal Bray, and I'm a real estate investor in Washington, DC. The purpose of this blog is to educate sellers, buyers, renters, landlords, private lenders, and fellow investors with questions about buying and selling houses.

This first post will be geared toward Sellers. Are you thinking about selling your house?

Then you absolutely owe it to yourself to read our special report:

"The 7 Most Costly Mistakes Most People Make When Trying to Sell Their Home"

This report is valued at $297, but for the first time I will be sharing these secrets with you for FREE! So stay tuned, because the secrets inside could earn you hundreds, if not thousands, more dollars in your pocket at the closing table when you sell your house!

If you’ve had experience selling your home in the past, some of this may be familiar to you. However, I guarantee that if you’ll invest a few minutes over the next few days reading through this report, you will find something that is valuable to you. For example, do you know what S.T.E.M. stands for…and how you can use this program to sell your house in less than a week? The answers are coming soon...

Think you’re pretty savvy when it comes to real estate? Take our short quiz to test your real estate I.Q. (try to keep your sense of humor, OK?).

And what about “short sales?” There’s an awful lot on the news and in the paper about this these days. For many homeowners who have recently found themselves “upside down” in their mortgage…short sales may be an option for them to get out of trouble. How does this work? You will find all these answers and more in the coming posts.

If you’re thinking about selling your house, and are interested in learning more about our home buying programs, please give us a call today. Even if you’re not actively trying to sell right now…maybe you will be in the next year or so? Or maybe one of your friends or family members is struggling to keep up with their payments right now? Either way, if you or someone you know might be able to benefit from our services, please direct them to this blog or contact us directly at http://www.pointproperties.org/. You can also call us 24-hours a day at 1-800-871-1999.

The bottom line is that we help homeowners sell their house “as is” for a fair price on the date of their choice. I hope we can help you or someone you care about!

If nothing else, I hope you enjoy reading the "7 Mistakes" over the next few days!


Very Sincerely,

Hannibal Bray